Picocells and Femtocells: will indoor base stations transform the telecoms industry?

Transcription

1 Picocells and Femtocells: will indoor base stations transform the telecoms industry? Mark Heath and Alastair Brydon with Rupert Wood Edited by Mark Chambers

2 Analysys Research Fixed Networks and Services Analysys Research Fixed Networks and Services online market intelligence service World Telecoms Marketplace online market intelligence service Fixed Mobile Convergence in the Enterprise Voice Market Mobile Operator Strategies for Fixed Broadband Strategies for Selling More to SMEs: analysis of demand for broadband managed services and service bundles Fixed Mobile Substitution in Western Europe: causes and effects Opportunities for Non-traditional Players in Communications Markets Beyond Triple Play: forecasts for broadband value-added services The Competitive Dynamics of DSL in Western Europe: prospects for local loop unbundling and bitstream Mobile Networks and Services Analysys Research Mobile Networks and Services online market intelligence service Strategies for MVNOs Mobile Number Portability: strategies for operators and regulators Person-to-Person Mobile Messaging in Western Europe: forecasts and analysis Mobile Operator Performance Benchmarks The Business Case for WiMAX The US Mobile Market: trends and forecasts Mobile Entertainment in Western Europe: value chain and forecasts, Forecasting the Commercial Impact of Wireless VoIP in the USA and Western Europe Evolution of Mobile Handsets to 2011 and Beyond: market analysis and forecasts Billing and OSS Analysys Research Billing and OSS Markets and Customers online market intelligence service The Next-Generation Bill: commercial and technical strategies World Telecoms BSS and OSS Markets: trends and analysis Published by Analysys Research Limited St Giles Court 24 Castle Street Cambridge CB3 0AJ UK Tel: +44 (0) Fax: +44 (0) Registered in England No Analysys Research Limited 2007 All rights reserved. No part of this publication may be reproduced, stored in a retrieval system or transmitted in any form or by any means electronic, mechanical, photocopying, recording or otherwise without the prior written permission of the publisher. ISBN

3 Contents 0 Summary ix 1 Indoor base stations could have a profound effect on the mobile industry Indoor base stations provide an alternative to traditional outdoor cellular infrastructure Indoor base stations are generating hype and uncertainty Mobile operators and equipment vendors need to answer some fundamental questions about indoor base stations 2 2 Indoor base stations could have major benefits for mobile operators Small, low-power, indoor base stations can achieve high-quality local-area coverage A diverse range of organisations are developing indoor base stations Indoor base stations require a compelling business case, and they need to work Indoor base stations may present opportunities in different market segments and with several wireless technologies 10 3 There is a major opportunity for 3G femtocells in the consumer market The greatest opportunity for femtocells is with 3G rather than 2G Operators need to adopt a large-scale approach to 3G femtocell deployment The benefits of 3G femtocells will outweigh the costs if vendors achieve their predicted price points 23 4 Critical issues must be resolved before 3G femtocells can be deployed widely Mobile operators need to be confident that implementation and performance issues have been addressed Mobile operators need to consider several issues when they select 3G femtocell vendors Mobile operators must carefully plan their introduction of 3G femtocells Small operators are likely to be the first to deploy 3G femtocells 30 Analysys Research Limited 2007 Contents

4 iv Picocells and Femtocells: will indoor base stations transform the telecoms industry? 5 The implications of indoor base stations for 2G, 3G LTE, WiMAX and WiBro are mixed Operators should not overlook the opportunity for picocells in enterprises G femtocell deployment could slow (or halt) 3G LTE adoption WiMAX (and WiBro) indoor base stations would be dependent on fixed broadband services 34 6 Indoor base stations have profound implications for the telecoms industry Indoor base stations will have a major impact on mobile operators network architecture and investment plans Indoor base stations will help wireless to win the battle for voice, but will strengthen the role of fixed broadband services 38 Actions 41 Market intelligence services from Analysys Research 44 Reports from Analysys Research 45 Custom Research: meeting your information needs 46 Analysys Consulting 47 List of Figures and Tables Figure 0.1: Annual cost saving per customer for a small operator (with 5 million customers) deploying 3G femtocells ix Figure 0.2: Annual cost saving per customer for a large operator (with 15 million customers) deploying 3G femtocells ix Table 2.1: Fundamental differences between macrocells, microcells, picocells and femtocells 4 Table 2.2: Main players that have announced the development of indoor base stations 6 Table 2.3: Assessment of the opportunities for mobile operators with indoor base stations across different market segments and wireless technologies 11 Figure 3.1: Annual cost per customer of upgrading a typical network from to macrocells 15 Figure 3.2: Annual cost per customer for a small operator (with 5 million customers) deploying 3G femtocells to 60% of households by Figure 3.3: Annual cost per customer for a small operator (with 5 million customers) deploying 3G femtocells to 20% of households by Figure 3.4: Annual cost saving per customer for a small operator (with 5 million customers) deploying 3G femtocells 16 Figure 3.5: Annual cost saving per customer for a large operator (with 15 million customers) deploying 3G femtocells 17 Table 3.1: Description of different mobile voice pricing strategies and their potential impact on average voice spend per customer 18 Figure 3.6: Impact on voice spend of different strategies for mobile voice pricing 19 Figure 3.7: Average annual spend on fixed voice services, per household using fixed voice, 1Q Figure 3.8: Average annual spend on fixed broadband services, per household using fixed broadband, 1Q Table 5.1: Comparison of typical downlink throughputs for HSPA and 3G LTE for in-building reception in different operating scenarios 33 Contents Analysys Research Limited 2007

5 Picocells and Femtocells: will indoor base stations transform the telecoms industry? v Authors Dr Mark Heath and Dr Alastair Brydon are founders of Sound Partners Ltd and authors of 30 reports from Analysys Research, including Mobile Operator Strategies for Fixed Broadband, Fixed Mobile Substitution in Western Europe: causes and effects, Mobile Operator Performance Benchmarks, The Business Case for WiMAX, Forecasting the Commercial Impact of Wireless VoIP in the USA and Western Europe, Pricing Mobile Services for Success: towards a bundled future, Evaluating the Options for Mobile TV and Radio Broadcasting in Western Europe, Lessons from the Japanese and South Korean Mobile Markets: handsets, services, content and pricing, Prospects for the Evolution of 3G and 4G, Scenarios for the Evolution of the Wireless Industry in Europe to 2010 and Beyond and Accelerating Fixed Mobile Substitution: detailed operator case studies. Mark is Director of Research at Sound Partners Ltd. In the past, he has held a number of marketing and business development roles in Nokia, ultimately becoming responsible for strategy and business development across Europe. Previously, Mark was responsible for business planning at BT Cellnet in the UK, after spending six years at BT in wireless systems research and development. He holds BSc and PhD degrees from the University of Leeds, winning the University prize for his research in telecommunications. Mark also holds an MBA, graduating as top student from Henley Management College. Alastair is CEO of Sound Partners Ltd. Prior to joining Sound Partners, he reported to Nokia s European management team and worked with many of Nokia s customers to implement market firsts ranging from the introduction of prepaid mobile tariffs to new mass-market content services. Previously, Alastair worked in a number of roles for the BT Group, focusing on the evolution of wireless services, networks and technologies. He also contributed to international research and standardisation of GSM, DECT and 3G. Alastair holds BSc and PhD degrees from UMIST, where he was awarded the IEE Prize for top student. Dr Rupert Wood (Principal Analyst) directs fixed telecoms research at Analysys Research. He specialises in wireline services, fixed mobile competition and convergence in voice. He has written reports on broadband access, services, pricing and regulation, fixed mobile substitution and VoIP, as well as reports that take a longerrange view of the structure of the telecoms industry. He manages the Analysys Research Market Share Monitor, directs the Analysys Research Fixed Networks and Services online market intelligence service and has a particular interest in the development of Eastern European/CIS telecoms markets. Before joining Analysys, Rupert was a Lecturer at the University of Cambridge. Analysys Research Limited 2007 Contents

6 vi Picocells and Femtocells: will indoor base stations transform the telecoms industry? Acknowledgements The authors would like to thank all those who assisted in the preparation of this report, especially Mark Chambers for editorial support and Jason Kowal for providing US content. The authors are also grateful to all those people who provided interviews and supporting information during the production of the report, including Simon Albury (3Way Networks), Chris Cox (ip.access), Stephen Mallinson (ip.access), Vicki Griffiths (picochip), Jeff Brown (RadioFrame Networks) and Will Franks (Ubiquisys). Disclaimer Figures and projections contained in this report are based on publicly available information only and are produced by Analysys Research Limited independently of any client-specific work within the Analysys Mason Group. The opinions expressed are those of the stated authors only. Analysys Research Limited recognises that many terms appearing in this report are proprietary; all such trademarks are acknowledged and every effort has been made to indicate them by the normal UK publishing practice of capitalisation. However, the presence of a term, in whatever form, does not affect its legal status as a trademark. Analysys Research Limited maintains that all reasonable care and skill have been used in the compilation of this publication. However, Analysys Research Limited shall not be under any liability for loss or damage (including consequential loss) whatsoever or howsoever arising as a result of the use of this publication by the customer, his servants, agents or any third party. Contents Analysys Research Limited 2007

7 Picocells and Femtocells: will indoor base stations transform the telecoms industry? vii Glossary 2G Second generation 3G Third generation 3G LTE Third generation Long-Term Evolution (also known as super 3G ) ADSL Asynchronous Digital Subscriber Line ARPU Average Revenue Per User BOM Bill Of Materials CDMA Code-Division Multiple Access CDMA2000 3G variant of Code-Division Multiple Access DAB-IP Digital Audio Broadcasting Internet Protocol DECT Digital Enhanced Cordless Telecommunications DSL Digital Subscriber Line DSP Digital Signal Processor DVB-H Digital Video Broadcasting Handheld EDGE Enhanced Data Rates for GSM Evolution EV-DO CDMA2000 Evolution Data Only GSM Global System for Mobile Communications GPRS General Packet Radio Service HLR Home Location Register HSDPA High-Speed Downlink Packet Access HSPA High-Speed Packet Access iden Integrated Despatch Enhanced Network IMS IP Multimedia Subsystem ISP Internet Service Provider Iub The interface between the Node B and the RNC in a UMTS network IP IPTV ISDN kbit/s LAN LLUB Mbit/s MIMO MHz ms MSC mw OEM OFDM opex PBX PC RFI RNC SIM SIP SMS SMSC UMA UMTS VoIP W-CDMA WiBro WiFi WiMAX WLAN Internet Protocol Internet Protocol Television Integrated Services Digital Network Kilobits per second Local Area Network Local Loop Unbundling Megabits per second Multiple-Input Multiple-Output Megahertz Millisecond Mobile Switching Centre Milliwatt Original Equipment Manufacturer Orthogonal Frequency Division Multiplexing Operational expenditure Private branch exchange Personal Computer Request For Information Radio Network Controller Subscriber Identity Module Session Initiation Protocol Short Message Service Short Message Service centre Unlicensed Mobile Access Universal Mobile Telecommunications System Voice over IP Wideband Code Division Multiple Access Wireless Broadband Wireless Fidelity Worldwide Interoperability for Microwave Access Wireless Local Area Network Analysys Research Limited 2007 Contents

8 Market intelligence services from Analysys Research Analysys Research s online market intelligence services help you keep track of the latest developments in major telecoms markets worldwide. All our services are regularly updated and include a sophisticated range of interactive search, benchmarking and download tools. Analysys Research Fixed Networks and Services provides analysis of European operators and ISPs, country reports for more than 30 European markets, country market forecasts, commentary on industry trends, and a module on the broadband market. Analysys Research Mobile Networks and Services provides insight into the strategies of key players worldwide, country reports for leading mobile markets, 3G status reports, country market forecasts and analysis of industry trends. Analysys Research Billing and OSS Markets and Customers includes a searchable contracts database, trends papers covering the latest issues in billing and OSS, and profiles of leading and up-and-coming vendors worldwide. World Telecoms Marketplace is a leading source of company and contact information and includes thousands of records with data on company activities, financial and operating data, and contact details for senior staff. Analysys Research Telecoms Systems Integrator Database contains data on over 280 systems integrators, enabling equipment and software vendors to identify potential partners, competitors and acquisition targets in Europe. Our Analyst Support package, which allows you direct consultation with our telecoms experts, is an ideal complement to your chosen market intelligence service. For more information on our services or a guided demonstration, please contact our Sales and Customer Service team on +44 (0) , us at research@analysys.com or visit our Web site at Market intelligence services from Analysys Research Analysys Research Limited 2007

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10 Custom Research: meeting your information needs Analysys Research has developed its portfolio of Custom Research services in response to customer demand for bespoke market intelligence, when more data is needed than is found in an off-the-shelf report or database, when there are complex questions about specific companies or markets that need to be answered, or when analysis needs to be tailored. Custom Research can deliver real value when an organisation needs to answer specific questions about how it is positioned in the market, and how to optimise performance at various stages of the product or service life cycle. Market opportunities? Match to customer needs? Effective procurement? Suppliers Costs? New idea generation Competitive landscape? Regulatory regime? Pricing? Competitors and partners Company internal processes Regulators/ government/ legislatures Market and technology trends? Strategy Product or service Launch Marketing strategy? Channel strategy? Optimum efficiency? Market analysis? Optimisation Customers Customer satisfaction? Competitive positioning? Understand how your company is positioned Optimise performance in the product or service life cycle In answering our clients questions, we bring a wealth of understanding of markets, and of techniques and services including: desk research, data collection and interpretation benchmarking services quantitative and qualitative surveys market sizing and forecasting competitor and partner profiling white papers, presentations and workshop facilitation event and trend analysis procurement assistance. For more information on Custom Research services from Analysys Research, or to discuss how we could help you to meet your specific information needs, please contact our Custom Research team on +44 (0) or us at custom@analysys.com. Custom Research: meeting your information needs Analysys Research Limited 2007

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